### [solution] » A firm uses two inputs, unskilled labour L and capital K to produce its product. The wage rate fo

Description

The Question

A firm uses two inputs, unskilled labour L and capital K to produce its product. The wage rate for one unit of labour is \$5 while units of capital cost \$20.

A.           Graphically depict the cost line for a C=\$1000  expenditure by the firm on inputs. Label the intercepts. Draw a well-behaved  arbitrary isoquant for an output level, Q0 to depict the optimal input levels L  and K for Q0 and C0 = \$1000, and explain the graph.

B.           Suppose the government institutes a minimum wage for unskilled labour of \$6 per unit. In the short run, with capital fixed at K, show graphically how much it would cost the firm to hold its output constant at Q0 and explain your graph.

C.          Show the optimal input mix the firm will use in the long run to produce Q

#### Solution details

Solution #00070353

##### [solution] » A firm uses two inputs, unskilled labour L and capital K to produce its product. The wage rate fo.zip

This paper was answered on 21-Sep-2019

STATUS

QUALITY

Approved

Sep 21, 2019

EXPERT

Tutor

#### BEST TUTORS

We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

• As a reference for in-depth understanding of the subject.
• As a source of ideas / reasoning for your own research (if properly referenced)
• For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.